Tata, Volkswagen Usher in New Era of Affordable Autos

New Yorkers looking to catch a glimpse of the world’s hottest car have until late April to visit the Cooper-Hewitt National Design Museum, which is displaying the $2,200 Tata Nano as an achievement in efficient design.

I was fortunate enough to drive “the people’s car” on a recent trip to India (that’s me in the photo).

Tata's (NYSE:TTM) Nano is at the forefront of a new trend: Affordable cars designed specifically for the developing world.

How much has the emerging world embraced the car culture? The chart below shows the dramatic rise in vehicle sales in China, India and Brazil since the beginning of 2009.

Click to enlarge

China’s vehicle sales were up 104 percent year-over-year in January and up 75 percent from two years ago, according to data from PIRA. India’s car sales grew by 50 percent year-over-year in January and were up 25 percent from a year ago.

The sales pace is a bit slower in Brazil but the country just set a new record in 2009 with 3.1 million sold.

The world’s automakers are scrambling to carve out shares of this promising market. Volkswagen’s Gol is already the best-selling vehicle in Brazil and this week Volkswagen (OTCPK:VLKAY) debuted the Polo, which will soon go on sale in India.

In January, Tata reported that 17,357 Nanos were sold from July to December. The company will soon be rolling out additional production in other areas of the country.

As we’ve mentioned before, vehicle sales are a good proxy for economic activity because of the amount of energy, labor and materials it takes to produce a vehicle. They are yet another indicator of how rapidly the middle class is expanding in key emerging markets – this group’s consumption patterns stand to have a profound impact on global commodities demand going forward.

Disclaimer: All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. None of U.S. Global Investors family of funds held any of the securities mentioned in this article as of December 31, 2009. #10-49